Travers and Macfarlanes managing partners David Patient and Charles Martin

"Hunky dory" is how Travers Smith managing partner David Patient describes the current mood at his firm, and the same sentiment would largely apply to City peer Macfarlanes, after both posted double-digit increases in revenue and profit per equity partner (PEP) for 2017-18.

Business has been going well for UK top 50 firms across the board, with almost all seeing revenues rise during the past year, but Macfarlanes and Travers in particular stand out as having enjoyed an exceptional 12 months.

At Travers, revenue increased by 17.5% to hit £146.9m – the ninth consecutive year of revenue growth for the firm – against a 24% PEP hike to £1.2m, while Macfarlanes boosted turnover by 20% to £201.6m as PEP leapt 25.6% to reach £1.74m.

Standout corporate mandates during the year included, for Macfarlanes, advising Disney on UK aspects of its $71bn (£54bn) purchase of 21st Century Fox assets, as well as acting for US car parts manufacturer Dana on its $6.1bn (£4.4bn) bid to combine with FTSE 100 engineering business GKN.

Other clients keeping the firm's corporate practice busy include Epiris, Kennedy Wilson Holdings, Virgin Group, Goldman Sachs, Legal & General, Omnicom Group, Visa Europe, GAME, Lexington Capital Partners and Greenergy.

Travers, meanwhile, has been involved in major deals including 3i's sale of its stake in Anglian Water Group, Hammerson's £3.4bn bid for Intu Properties, UK tech company Micro Focus's $8.8bn (£6.6bn) purchase of Hewlett Packard Enterprise's software business, and Bridgepoint's £1.5bn sale of sandwich chain Pret a Manger.

Other key clients include ZPG, Breedon Group, TA Associates, Patron Capital, Office Space in Town, British Steel Pension Scheme Trustee and Shazam, which the firm advised on the European Commission's investigation into its acquisition by Apple.

But it hasn't all been plain sailing in recent years. In 2015-16, Macfarlanes saw PEP fall 16.7%, while last year Travers' PEP dropped 4.4%, and on this year's results Macfarlanes senior partner Charles Martin cautions: "There's no guarantee that we'll do this well again next year."

Both firms, from their middle-market outposts, have a unique perspective on the industry. Unlike their more globally focused rivals with sprawling international networks, each has only one other office outside of London to concern itself with. Travers has had a small office in Paris since 1999, while Macfarlanes opened in Brussels last year to accommodate a competition team hired from King & Wood Mallesons, after closing its Johannesburg base at the end of 2016.

The UK-centric approach of both firms means that currency uplifts caused by billings from overseas currencies do not have as much of an effect as they do for rivals. It also means that when the UK market is buoyant – as it was in 2017-18 – Macfarlanes and Travers tend to see positive results. This is a trend that Martin says has become more prevalent during the past few years for both firms.

"Our business is more volatile than it used to be – things didn't used to go up (or down) so dramatically. We're very significantly exposed to the UK market, so when we're in the right place we see a disproportionately positive effect. But equally, if we are slightly in the wrong place we can be disproportionately negatively affected. We don't have the broad portfolio effect that larger firms have: some years that will hurt and some years it will help. A million of revenue here makes a bigger difference than in a bigger firm: maybe that is pretty obvious," he says.

➤➤  Macfarlanes senior partner Charles Martin is among the speakers on day one of LegalWeek CONNECT, taking place on 28-29 November at County Hall, London SE1, where he will discuss issues around collaboration. Click here for more information

Back in 2014, both firms repositioned themselves strategically to combat the headwinds of a changing market, in an effort to to broaden their focus beyond their traditional heavy leaning on corporate.

After real estate work dried up in the wake of the crisis, Macfarlanes scaled back its offering in the sector, which once contributed a quarter of the firm's total revenue. By 2014, the practice accounted for 9% of turnover, though that figure has now increased to 14%. Similarly, in 2014 Travers shifted gears and worked on balancing its practice portfolio, with a greater emphasis on financial services and litigation.

Today, though, it seems that things have moved back towards how they looked before the crash, with Travers generating roughly half of its 2017-18 income from corporate, alongside about 20% from disputes and roughly 15% from finance. Key disputes roles for Travers in the past year have included advising Hewlett Packard in relation to fraud claims amounting to $5bn arising out of the $11bn acquisition of Autonomy in 2011.

At Macfarlanes, corporate contributed 43.2% of total turnover last year, with finance accounting for 16.2%, disputes 15.3% and real estate 14%.

Macfarlanes M&A co-head Luke Powell says: "Given broader political and economic developments, we remain pleasantly surprised at how busy we are. Last year was a record year for us and no one guessed that was going to happen, least of all me – I think my partners have got bored of me calling the top of the market. I don't want to appear complacent though. We do hear from some of our private equity clients that investors are beginning to hold off on UK and European exposure."

In terms of partner churn, Macfarlanes has seen two exits this year – long-serving investment fund finance head Bronwen Jones, who joined Reed Smith, and private equity partner Emmie Jones, who left for White & Case – while highly rated Eversheds Sutherland corporate crime and investigations head Neill Blundell came in to launch a white-collar practice for the firm.

Martin explains that there are no specific hiring targets Macfarlanes needs to meet. "We'll play it as we see it – we look at demand and talent available to us and make a call. We like to use the flexibility and agility we have to be a combination of strategic and opportunistic."

Travers, which today (20 September) announced the hire of Sackers derivatives, structured products and pensions partner Sebastian Reger, made another rare lateral hire last month in the form of Jones Day real estate partner Alex Millar, before which the firm's last lateral was in 2014.

Travers disputes partner Stephen Paget-Brown says: "Our pipeline is looking extremely full and we expect our workload to ramp up – we have several trials commencing in the next few months, including a three-month trial and a nine-month trial. We have been recruiting as hard as we can at all levels but it takes time to get the very best-quality lawyers through the door. Although we have expanded in headcount by about 65% over the last year or so, we are still hiring on a continuous basis. I can't see at the moment that that process will slow down."

So what's next for both firms? For Macfarlanes, a change of management is on the horizon, with both Martin and managing partner Julian Howard set to step down from their respective roles in 2020. Private client partner Sebastian Prichard Jones will take up Martin's post, while Howard's replacement is yet to be decided.

A partner at a rival firm acknowledges that Martin has built a strong brand for Macfarlanes and that the change in management is simply a natural "changing of the guard" for the firm, but adds that while Martin will be missed, "no one is indispensable".

Patient, on the other hand, will stay at the helm of Travers for another three years after he was re-elected earlier this year, shortly after it was announced that senior partner Chris Hale would resume his role for the next two years.

Travers private equity head Paul Dolman reiterates the challenges 2018-19 may bring, adding that a volatile future market may impact the size of the teams the firm may think they need.

He says: "At the moment, the stars seem to be aligned. A number of financial sponsors have successfully raised new funds, the banks are lending and the economy seems stable. There are some clouds on the horizon – tariffs and Brexit are the obvious ones – and there will inevitably be a hiatus as we approach March next year, but for now the PE industry appears in excellent health."

However, as Patient warns, it may not all be plain sailing. "There's lots of dark clouds ahead," he says. "Theresa May is hanging on by her fingertips, and no one knows what Donald Trump will do or say even from one day to the next. There will be bumps in the road ahead."